Let's start in Brazil. Botafogo is a historical team in Brazil with legends that have played in black and white. Didi played over hundred games and scored sixty goals. Won three world cups and was player of the tournament in 58. Honours for the club don't look as good as they should with two top-flight titles. They have won Campeonato Carioca (Rio State Championship) 21 times. As national top division didn't get started until 1971. I guess every Brazilian team would make the argument that should have won more on the national level if there was a league before the '70s. Before the 70s travel around Brazil was difficult and there was more focus on state championships. Rio is one of the main football regions. Also won the interstate cup against Sao Paulo three times in the sixties. If the national league was around before the 70’s then they would have been in the mix to have won couple more times.
From the videos online the fans look very passionate and what to be expected from South American fans. It has a good atmosphere and would be fun to attend. The stadium has great architecture with views of the mountains in the background. It looks amazing on the TV. My only complaint would be the running track so the fans are a bit far from the players. Textor is aiming for redeveloping the former Olympic stadium. He is looking to lower the pitch and remove the running track. This should help add more revenue streams by making this a more widely used venue. They could book more meetings, conferences, and concert venues. It has been used as a concert venue before for Paul McCartney, Justin Bieber, and Guns N' Roses. This could be a good earner going forwards.
Only recently the Brazilian clubs allowed outside investment. In the past, they were non-profit organizations but somehow teams have run up large debts. When Textor brought Botafogo the top 23 clubs owe 1.5 billion pounds which is double the club's turnover. That is a large level of debt. I know it's more complex than just debt level. The debt itself isn’t normally the problem it’s the paying the interest that is the issue.
Why put your money into a football league that is underperforming?
Might be a bit harsh but Brazilian domestic football should hold a higher place in the world. It should be broadcast live in the UK and shouldn’t be hidden on specialist streaming websites.
First reason is potential. There is a lot of history with Brazilian football. Its league runs from April to November with late evening/ early morning kick-offs for European audiences. Not many European leagues run in the summer. Foreign TV rights could be built up. In the UK it's broadcast on gambling websites with Portuguese commentary or via the premium app Fanatiz which I have subscribed to. It’s a horrible app but a great idea. Stream any match from the top 2 Brazilian leagues and the Argentinian league. It's nice that you can catch up on demand. Very frustrating that no functions to hide scores. There is talk about the Brazilian breakaway league. As Brazilian League is the only league in the top 10 leagues that is still run by the national FA. The Brazilian FA has been criticised for how they run the league. A major stumbling block is a revenue spilt for the clubs. The larger clubs want a bigger stake. It's a better league if the revenue is spilt more evenly as creates more competition. This can help build an audience. This is part of the reason that the Premier League is so popular abroad compared to other leagues like La Liga that give more money to the top teams. If they can make the league more popular then revenue will be bigger for top teams even if they are getting a smaller percentage. From the outside, it seems like they need a clear vision and dedicated organization to get the most out of the potential.
Personally, if I was in charge I would broadcast on YouTube with English commentary. This is something the Women's Champions League is currently doing to drum up the audience. In the past, Premier League sold their rights cheaply to big networks and once the audience is built up they hike up the price. Then I would then advertise indirectly by getting podcasts and YouTubers with large audiences to cover the league once the European league has stopped for the summer. Get the niche interest and then hopefully it will grow. As Textor was previously the chairman of the FuboTV; which was similar service to Now TV but in America and some other countries. With over one million subscribers one of its main selling points it’s a way in America to watch live football and sport without cable only needs the internet. With that background, he could find an underperforming product and have some input on how to improve the situation.
The second is the domestic market. Currently the 12th biggest economy in the world and largest in South America and one of the BRIC nations that have to allot of potential for growth in the future. But this has been said for generations. If there is a large growth in the domestic economy then it’s more likely that TV stations will be willing to buy the tv rights for more and fans will spend more on merch.
The third is talent. There are Brazilian players everywhere. Look at any random top-flight league in the world. Bali United Football Club is a professional football club in Indonesia. They have two Brazilians in their squad. The talent pool of players is unlike any country in the world. This is a challenge; Please send me on Twitter or in the comments if you can find a professional top-flight league without a Brazilian player. Textor is looking to improve the youth setup. That could be a massive beacon for talent.
Work permits
The player needs to get a GBE to get approval for a work permit to play in the UK. GBE is a points-based system to show the quality of the player. These are based on a couple of factors, playtime, strength of the league, and if they are playing in continental competition. Players need to get 15 or more to pass (10-14 points and then they can appeal). Playing in the Brazilian top flight is 8 points. So playing 80% of the time in the Brazilian league domestic league would be enough to get a work permit granted as that would give you 7 points that are needed. It is even easier if they are playing in Copa Libertadores. As it’s rated the same as the Champions League in terms of points. So a player gets 5 points for his team getting to the group stage. Meaning there are only 3 points needed. That would need only 40%+ minutes in the league or if the team goes on a cup run the players don’t need any minutes.
The top six teams in Brazil qualify for Copa Libertadores. It's a crazy cup and always worth keeping an eye on. Last year ex-Man Utd defender Rojo attacked a security guard as Boca Juniors got knocked out. The last time Botafogo qualified for Copa Libertadores was in 2016. In 2017 they got knocked out in the Quarterfinal by Gremio (who won the Cup and now plays in the second tier of Brazilan football). South American Football moves fast.
Under the old system, a player had to be international / youth international to get a work permit. So now it's much more achievable to get a player before their value skyrockets. The system changed last year with Brexit. I am surprised that more players haven't been signed from South America in the last two windows.
I can see the Brazilian league being like the French league from ten or fifteen years ago. Newcastle under Ashley signed six players from the league une out of ten signings in 12/13. That season Newcastle got to the Quarterfinal of the Europa league. Ashley has a great eye for bargains. Starting to see more Brazilians in Premier League but it's not quite at that level yet.
Kit Manufacturer
The first season under Textor; Botafogo went unbranded. Textor said that he wanted to find a global kit supplier to get more international kit sales. It was recently announced Reebok would be the kit manufacturer for next season. It’s the first time since 2012 it has got a major football kit contract. Part of the reason for this is the change of ownership. Reebok was owed by Adidas up until 2021. When they got sold to Authentic Brands Group. The founder of the group Jamie Salter will be or has invested in the eagle group. When talking about Lyon being added to the group mentioned that Jamie Salter and Bill Foley will be investing. (Bill pulled out to try and buy Bournemouth).
There was some chatter about the whole eagle group using one kit manufacturer. This might be something that happens in the future but Palace only recently signed up for a long-term deal with Marcon. I think that this is just rumours. From the outside, I think the requirements for each club are too different. It’s not like each team will wear the same design with a different badge. All the teams have audiences in different places, while Textor might be hoping cross sales (Botafogo fans buying Palace and RWD shirts). I am not sure that will happen in a massive volume. So far Palace club shop doesn’t sell other teams' merchandise. Lyon is one of the top clubs in France where as others in the group are top clubs in their city. I am not sure bundling kit manufacturing will actually increase the value of the deal. As well this is very symbolic of having the same kit manufacturers. Might get some pushback from fans that want their clubs to be more independent.
RWD Molenbeek
They are the team that has been invested by Eagle Group. Based in Brussels in the 2nd tier. Only just missed out on promotion last season. The ground only holds twelve thousand but looks like they can generate a decent atmosphere. If I lived local I would be very tempted to attend matches. The former version of the club once had Cheikhou Kouyaté, Adnan Januzaj, and Michy Batshua on their books as youth players. But none of them stayed very long. So this could be a good catchment area for young talent.
Work permits
The new system makes it impossible for current RWD Molenbeek players to get a UK work permit without being fully international. But this is due to RWD being in the 2nd tier. If they get promoted then it becomes a different matter. Belgium's top flight is band 2 so that gives them 10 points for being at that level. The player only needs 5 points for a work permit. That works out to be 30% of the minutes. If you're a young player looking for a Premier League move then 30% minutes in a season is a reasonable target. Last season Nathanial Clyne played more than 30% with 13 league starts. In comparison to Botafogo, this requires much fewer minutes.
Belgium Loan
Before Brexit giving a player a loan to move to Belgium till they got a work permit was common practice. In Belgium, a non-EU player can get an EU passport after three years of residence. They are quite happy to give out work permits for Footballers. Send a good player at 18 to Belgium at 21 they will be an EU citizen. This is still very handy for a player to have due to Seria A and La Liga as there is a limit of Non-EU players. That’s not the same in all leagues Germany has very few restrictions.
It’s a league well-known for developing talents. Christian Benteke, Luka Milivojević, and Cheikhou Kouyaté all played in Belgium in the early days of their career. Benteke played 116 games and 43 goals over 6 seasons. Luka and Cheikhou both being teammates at Anderlecht. Luka was there for two seasons and Cheikhou was in the Belgium leagues for Seven seasons and 189 matches.
Merger with Dutch league
There have been talks about merging Belgium and Dutch leagues to make the TV deal more competitive compared to Premier League. A major stumbling block is a European qualification. Both leagues get two Champions League, one Europa, and two conferences spots each. But if they can make a deal with UEFA then it’s good potential for a league that would get more foreign interest. Both leagues have got teams that are regulars in the Champions League group stages but also Belgium's top flight has six teams with stadiums holding less than 10 thousand. There is a big gap between the top teams and the rest. if they join forces suddenly average quality increases. There would be more interesting fixtures.
No Feeder Clubs
I have listened to many Textor interviews; that relationship needs to be good for all clubs. He seems to be passionate about the point that there isn’t a top team. That with synergies that I will mention latter these clubs will all improve by working together. I would normally be very cynical of a message like that but looking at his actions speaks louder than words. He attends games all over the place and is quite evenly spread. His Airmiles must be through the roof. There have been weeks that he has attended games in Belgium, Brazil, and Britain. He is more well-traveled in a week than I in a decade. Not that I am jealous as all.
Also there isn’t one big club in the group to feed.That ultimately none of these teams are the big dog. All of them will be looking to make money by developing talent. It’s almost like the group is a feeder group and that is the business model. It could also be an exit strategy. If Glazors sell Manchester Utd in 5, 10 or 15 years time. The new owners might look for group of clubs to match what Manchester City has. They could look to buy Eagles Holdings excluding Palace.
Olympique Lyonnais
Textor looking to complete take over of Lyon. At the time of writing the deal has not been completed. The timetable from article a couple of months ago suggests the deal should be finished any day now.
Growing up Lyon was the dominate team in France. Winning League Un seven times in a row. From 01-02 to 07-08 the league was theres. To put that into context PSG has only five in a row and only five teams have more titles. Lyon has never won the league outside that seven seasons streak. In europe they have got to Champions League Semi Finals in 2010 and 2020. The are one of the big hitters in France and are ranked 22nd on UEFA club coefficient ranking. With 59k seater stadium that cost €480 million to build. That hosted Womens world cup final and Mens UEFA European semi final.
The womens team are completely dominant in Europe. They have won the Champions League eight times. Nearest other club to them is Frankfurt with four. They have won the french league 15 times. I would love it if we could get them to play a friendly at Selhurst.
Youth Team,
They have had really good spell of producing top players. In recent years there has been Martial, Lacazette, Umtiti, and Benzema. This contribution leads to Lyon having the 8th largest negative net spend since 10-11. This is a high end talent from there academy. I am hoping once things have settled from the take over that they can build a close relationship between this academy and Palace’s. It would be great for Palace’s youngesters to go to Lyon for a week for training in the winter.
Issues
This makes the deal look very rosy. But there are issues. Last season Lyon finished 8th. Missing out on European football. In FY20 Lyon had 20th place in revenue for Europe with revenue of €194 million. But €65 million was from UEFA without European football it really causes a dent in the clubs' finances. This was the COVID season that was cut short and the champions league run to the semi-finals.
That was the last time they played in the champions league. This season they don't have European football and have to fight to earn Europa League or conference league. European football is so key to Lyon's revenue as the French TV deal collapsed joining COVID. League 1 as league only gets €660 million which was only up 20 million from ten years ago. Compare that Premier League’s €3,635 for last season up almost three times as much as ten years ago. This shows the gap that Premier League is creating in broadcast revenue. Pre-COVID back in FY18 Lyon was 29th for Revenue and 19th for Gate Receipts, That season Palace as 27th for Revenue and 14th for broadcast revenue. The point here is that Lyon could be a massive player if they could increase broadcast revenue.
Super League
If a super league is created to rival the Premier League as the abovementioned gap increases. Lyon has a high chance of being selected as one of the bottom-half clubs. If it’s a closed shop and is successful then Lyon's value could increase massively. Just look at the valuation for MLS clubs. With the average team being valued at $582 million. Best teams in MLS revenues of $33 million a year. Fobes has Lyon valued at $368 million with revenue at $167 million. Part of the discrepancy is that US sports teams are large status symbols but the otherside is that they close shop and guarantee funds for the future.
Jean-Michel Aulas
He was the owner before Textor and hopefully, he remains as president. Much like at Palace with Steve Parish. If they can keep the expert then knowledge is retained within the club. Jean-Michel has done very well in the transfer market. Bring in cheap players and sell them for large fees. Michael Essien is a good example. Brought him for €7.8 million in 2003 and sold him to Chelsea for £24 million in 2005. At the time it was a transfer record for Chelsea. But his critics would say he treats Lyon too much like a business and should take more risks.
Future
If I was Lyon I would be following Dortmund's lead by investing in young English-born players that want to get first team football early in their careers. For example, in recent times Dortmund has had Sancho, Haaland, Bellingham, Reyna, and Bynoe-Gittens. They are all English passport holders. It this, not an accident that Dortmund has done this. As they know if they develop these players they will get a high fee. As there is large premium for English players. They promise a high level of football and a good amount of minutes. They can promise this as they don’t have a bulky squad where youth cannot get a chance as it’s too risky. I would use the Textor’s Palace connections to help with scouting UK youth league. Then make offers for high potential players that could adapt to playing in France. Worth pointing out that Palace wouldn’t be able to sign these players as would already be looking towards moving aboard for first-team chances. If these players were leaving the UK as non contracted wouldn’t cost as much compensation. But if they signed for UK team there would be a larger compensation fee.
Florida Academy
North of Maimi there is FC Florida Prep Academy. It’s a youth academy for players in the states. It’s currently advertising a “legitimate pathway to Crystal Palace, RWD Molenbeek, and Botafogo through shared ownership.” So there is an expectation if you succeed at FC Florida that you get a chance at one of the other clubs. If football audiences continue to grow in the states I could see a future where there is a premium added to fees for Americans due to commercial advantages. As clubs with an American star could go on a tour of the states or increase commercial interest or more fans that will travel over from the states. NBC has paid £2 billion for six seasons of the tv rights. This shows the appetite for the game in the states. They wouldn’t have paid that if it wasn’t worth the figure. I watch NFL on gamepass with American adverts. Fox is advertising the world cup hard. The marquee person is Pulisic. The advert included appearances from John Hamm, Mariah Carey, Tom Brady, Ronaldo, Messi, and Pulisic. American adverstors are desprate for player like what Son is to South Korea. Pulisic is close but he’s not that. If Palace can find that person that will be headliner for when US host the world cup. They could be worth large amount in terms of advertising.
Career pathways
This group will have several youth academies for places to develop. From there they can then develop in several different countries. At that point. If they are one of the players with the highest potential they can end up playing professional football. These players can hone their skills in the Brazilian and Belgium League and if they are good enough, they can then really push themselves into the Premier League. They can do that without leaving the group. These career pathways will be a great advertising tool to try and get the best talents in Brazil, Belgium, and the US. Remember any player making it in football has low odds as an individual. The more players in the group increase the chances of high-quality players coming through. A player from the US could end up playing for the Florida Academy, then moving on to Belgium. Maybe then to Palace and beyond. At the same time when they move they will still be in a familiar situation as some things will be constant in the group. This season RDWM has eight players on loan from Palace and Botafogo. It looks like the teams within the group will play each other regularly in friendlies. Players would already be aware of the area.
From this viewpoint, you could make it look like this structure is only here to benefit Palace. This isn't really in the spirit of the partnership. It's about getting players to reach their maximum level but the clubs should get the correct remuneration for developing the talented player. That said Palace knows the skills that want from 23/24 year old to get a large fee. This would mean that at a young age players within connected academies that play with each other know the desired skills. This is similar to a vertical takeover. When a company buys supplying company. For example, a fizzy pop company buying a bottling company. This secures supply, knowledge, and control for the fizzy pop company. This happens to a lot of businesses like Microsoft games buying up lots of game developers or Disney buying up anyone that has IPs or makes movies.
Synergies
A horrible corporate word but very useful we are looking for ways to connect these invested clubs so that they share knowledge and resources to be more than some of the parts. These clubs work together to better develop players. a good relationship would be beneficial for all. Also, these relationships can be used to reduce costs. They can share resources. If RWDM is interested in a player in the football league they can contact Palace scouts rather than sending their own. If they are thinking about changing youth academy facilities they could ask for advice from category one academy. If RWDM has player with very bad injury they can send him to Palace for rehab. It would mean that RWDM wouldn't need to invest in rehab facilities for those kinds of injuries. It can often be good to get a second opinion.
Owning the whole process
For most multi-club groups that are ensuring that the style of play is the same. City group is high possession and patient style of play. Pacific Media Group (The group that owns Barnsley, Nancy, Kaiserslautern) plays football with a high press. Worth pointing out that our manager shortlist included three managers that had been worked within PMG. Vieira and Favre at Nice and Ismael at Barnsley. But Nuno doesn’t play with a high press so maybe it’s not worth reading too much into that. Also Textor appointed Botafogo's new manager Luis Castro does also use a high press. So maybe high presses will be a thing that would be here after Super Pat leaves. The point is that if all the clubs with similar style and look to bring in young players with that skill set. They more likely to progress in the group system.
But the otherside to that coin is that gives up atomy in each of the clubs. So far the clubs look like they have some freedom from each other. This could be something to keep an eye on.
Palace brings to the party
Recently the academy was upgraded to category one. The elite player performance was brought in 2012 to improve England team after some disappointing tournaments. Using a model similar to Germany's youth set up. That was doing quite well at the time. Fast forward to today England has some of the most exciting young players. In the last Euros England had the 2nd youngest squad behind Turkey. Adding to that South London is a great catchment area.
There will be a lot of knowledge at the Palace about improving and setting up youth setup. Textor has the ambition to improve academies in Brazil and US. Palace can be used as a template or knowledge gained by creating a high-end academy.
Premier League shop window
Richardson signed from Fluminense to Watford for around ten million. A year later he signed for Everton for thirty million. His price tripled due to his performances in the Premier League. This could be so important for the group. If Botafogo finds a great wonder kid then when he is ready he moves to Palace. Then the value of the player can go up massively within the group.
Transfer pricing
Got to be careful in these relationships. We need both teams to work and continue to work together. So prices need to be fair. This might annoy some fans as the way to make them fair is for a lower fee but a higher sell-on percentage. If one of the players from Botafogo makes it big at Palace and goes for big money to Liverpool. It could create resentment if profits are not shared and cause more resistance if Palace wants other players. This would cause problems as all teams need to pull in the same direction to create value.
Portugal possibility
Textor has been courting Benfica for a long time. There was talk that he wanted to list Benfica on the new york stock exchange. It’s currently traded on the Euronext Lisbon stock exchange. Benfica is an interesting club with a curse. Béla Guttmann was a manager that won the 1962 European cup after the final he asked for a pay rise. He was rejected and cursed the club that they wouldn't win another European Cup for hundred years and they have since lost eight European cup finals.
Textor was on “Business Of Sport (Athletic podcast)” talking about the low fee Monoco paid for Bernardo Silva and then the large fee that Monoco got from Man City. He added if he could go on loan to a mid-table premier league team. As quality in the Premier League is high in every match. This means that scouts will be more certain and less risk in signing the player so they will be willing to spend more. But it didn’t mention that since then Man City has brought Rúben Dias and Ederson directly. After the Champions League run and current reputation, teams will take the risk and pay large fees directly currently. That said João Cancelo did go around the houses (Valencia, Inter, and Juventus) before reaching Man City. All four of these players are former academy players for Benfica. If Textor buys into that club then that’s a great academy for Palace’s youth set up to get advice from.
Before writing this I didn’t realise that Brazilian Ederson was at Benfica’s Academy. He joined them at 16 before going back to Brazil to get first-team football then re-signing for Benfica at 22. Both Portugal and Brazil have extremely close links. As Portugal colonised Brazil and changed its culture to be like theirs. When Napoleon invaded Portugal they moved their capital to Rio. In Brazil, they speak Portuguese; worth adding that the language is different enough that Disney released a Portuguese audio and a separate Portuguese (Brazilian) audio version of Encanto and other movies. It’s the same language but Disney pays for two different dubs. Dubs are expensive they don’t re-dub for many languages. After searching tik-tock found out that Brazilian’s find Portuguese spoken by Portuguese as very annoying. It’s a very common route for Brazilian players. They get used to being within Europe but still in a culturally familiar place. There have been some high-profile Brazilians that have represented Portugal in International football like Deco and Pepe. At Benfica, there will be lots of expertise on how to help South American players settle in Europe. That experience would be very handy for the rest of the European teams in the group. Often the ones that do not settle go back to the Brazilian league and some of them become stars in that league. Gabriel Barbosa who was on loan at Benfica was last season's top goal scorer in Copa Libertadores.
Patience
RWDM and Botafogo are in the process of improving. They are doer uppers. They will be able to contribute more to benefit Palace but we have to remember the Premier League is the richest league in the world. For them to find and develop players that are at that level will take time. It's not a quick benefit. This could take a long time for these career pathways to bear fruit. So everyone needs to have patience in the process.
Market Value Risk
This plan for selling players for high fees is reliant on the top clubs continuing to spend large fees on Premier League talent. Predicting how the market will be in the next decade is very difficult. For as long as I can remember there has been talk about the football bubble bursting. That Newcastle paid too much for Shearer. There is always that noise in the background. The new UEFA FFP rules could shake up transfer fees. If it’s not watered down it will be wages plus amortisation (transfer fee spread out over the contract) that cannot be over 70% of revenue. That would massively reduce the amounts that clubs would be able to pay players and pay in transfer fees unless revenues increase. Last season without COVID only two premier league teams would have this under 70%.
This will kick in once the new format of the Champions League would start. This includes more group stage games and more weekend football from 2024. This would increase revenues for the top teams and the inclusion of wildcards would mean that highest rated UEFA teams would get bumped up from Europa or conference league. The Premier League could have six teams in the champions league quite regularly. So limiting wages and amortisation would stop this growth just going to the players and selling clubs. This plan is aiming to stop the “prune” juice effect as an increase in money comes then an increase in cost that would mean profit is the same. But it could lead to more spending from the top teams as want to secure the European spot and an increase in new revenue might cover more of it. That 70% of revenue total after the deal is more than wages and amortisation before the deal. Worth adding the Premier League hasn't got an agreed plan in place so this would only apply to teams in UEFA competitions so far.
Location location location
Looking at the similarities between all the teams. They all seem to be within areas that are great to visit. I have only passed through Brussels but only an hour's drive from Bruges. Which is a lively town to visit. Not been to Rio but it is a famous party city. South London does have its charms. Lyon is UNESCO World Heritage site and close to the Alps. The point is that none of these teams are based in areas that would only go to because of Football.
Mitigate Risk
Different teams, different league, different continents. If there is a problem with one league. That if Premier League loses sine or Palace go down the leagues. Then it’s a problem but the group as whole would be fine. It’s only one part of bigger whole. This makes putting money into group less of a risk; as all the eggs aren’t one basket. It’s still all football related. It’s not guaranteed that football popularity has peaked and something new would replace it. Some fans are concern that one of the teams struggle financially and this takes resources away from the rest of the group.
Elephant in the room
I am writing this article assuming that Textor and his investors are investing in these companies for business reasons. It could just be for fun and it’s less about making high transfer fees by owning the whole process from youth development to Premier League exposure. It could just be that he expects no return. I am assuming that he would like to develop good players and sell them at around 23 or 24 as that’s the maxim price and repeat the process to generate money. But he may want to get those great players and get them on long contracts and enjoy them playing for his teams. In a statement on John Textor's website about his intention for Benfica “the goal to keep many more of the best players of SL Benfica playing for SL Benfica.” This hints that he wants to keep the best players but states "more" not all of them. These projects could only be about enjoyment and nothing about return on investment.
Comments
Post a Comment